A Machine Distributor Sells Two Models, Basic and Deluxe Actual Sales Were 7,000 Basic Models and 2,800 Deluxe Models

question 73

Multiple Choice

A machine distributor sells two models, basic and deluxe. The following information relates to its master budget.
$$\begin{array} { l c c } & \text { Basic } & \text { Deluxe } \\\text { Sales (units) } & 8,000 & 2,000 \\\text { Sales price per unit } & \$ 8,000 & \$ 12,000 \\\text { Variable costs per unit } & \$ 6,400 & \$ 9,000\end{array}$$
Actual sales were 7,000 basic models and 2,800 deluxe models. The actual sales prices were the same as the budgeted sales prices for both models.
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What is the sales quantity variance for the basic model?

• A) $120,000.
• B) $256,000.
• C) $1,344,000.
• D) $1,600,000.

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Definitions:

Recession

A period of declining real GDP, accompanied by lower real income and higher unemployment.

Average Fixed Cost

The fixed expenses of a business spread out over the total number of units produced, decreasing as production increases.

Total Revenues

The total income generated by a firm from its sales activity, calculated by multiplying the selling price by the quantity sold.

Nonprice Competition

Strategies employed by companies to differentiate their products or services from those of competitors, other than through lowering prices, such as marketing and product quality improvements.